The National Institute on Retirement Security released on Thursday its State Financial Security Scorecards, which summarize each state's retirement outlook. Diane Oakley, executive director for NIRS, led a webinar on Thursday discussing the results.
"We've certainly seen a growing interest in how individuals are being prepared for retirement and what the challenges they face are," Oakley said. "At the state level, one of the things we know is the safety nets' needs are likely to increase as we know the population in the United States continues to age."
She said that the three potential sources of economic insecurity (not having enough money, having expenses grow beyond what people can afford, and not being able to find work) "are all key things that deserve attention."
The states' scores are based on eight economic variables in three categories: retirement savings, current retiree costs and labor market conditions for older workers.
Retirement income takes into account participation rates in private retirement plans; the average defined contribution account balance; and the marginal tax rate on pension income.
Retiree costs include Medicare out-of-pocket costs; Medicaid generosity, which was measured by the average spending by the state per elder beneficiary; and the housing cost burden.
The labor market score is based on the unemployment rate for people 55 and older, and the median hourly earnings rate for people in the same age group.
"Every state has something that needs to be done, and states must remain vigilant over time."
However, some states are in better shape than others. "When we look at these three states, one of the key things that comes across is they all had relatively strong labor markets. At the same time, all those states tend to have lower retiree costs," Oakley said.
"No state does well on retirement plan coverage," Oakley said. For example, Iowa, the best performing state for retirement plan participation, had a participation rate of only 54%. Furthermore, no state has retirement savings that are equal to median income.
Kathleen Kennedy Townsend, chairwoman of the Task Force on Retirement Security for All Marylanders and former lieutenant governor for Maryland (which scored a 6), was also on the webinar. She said five states have enacted legislation to strengthen retirement systems and 20 other states are considering legislation.
"Government has figured out, and Utah has done a report, if people don't have a pension, those costs will bear on government, and therefore, government better figure out pretty quickly how to help private businesses develop retirement security."
She said what people want is "reasonable retirement benefits, and they want it to be easy. They want it to be affordable, portable, professionally managed and [with] low fees." An earlier report from NIRS, "Retirement Security 2015: Roadmap for Policy Makers |Americans' Views of the Retirement Crisis," found that 86% of Americans believe the nation is facing a retirement crisis, and 84% said Washington needs to do more to support retirement security.
